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The following hypothetical dialogue between China and Japan is a creative analogy to help the public understand the pro-China and pro-Japan irredentist claims.
China: Yo listen, the Diaoyu Islands belong to me. Historical records show that I have owned them since the 1400s until you stole them in 1894 after our defeat in the Sino-Japanese War. Okay fine, I did agree in the Treaty of Shimonoseki you could take them as part of Taiwan's "surrounding islands". But since we play fair, I should have gotten them back already.
Japan: Wow there. First things first. Call them by their rightful name - Senkaku Islands. Second, you did not give those islands to me in 1894 because they were not yours to begin with, and therefore were not yours to give away. But say that you owned them before 1894 and I stole them. So what? How are they yours now?
China: I am not going to call them Senkaku Islands. Why don't you check your facts, because documents from the Ming and Qing dynasties, and the Kingdom of Liuqiu, referred to them by the Chinese name, indicating Chinese rule over the islands since the 1400s. Anyway, getting back to the point, you took them away from me but 49 years later, the Cairo Declaration said that you must return all Chinese territories you had snatched previously. Then two years after that, you were actually supposed to act on the terms set by the Cairo Declaration. The 1945 Potsdam Declaration said so. So, hah!
Japan: Is that seriously all you got to back up your claim? Some shabby documents from way back when?
China: No, actually I've even got the international law to back me up. Remember the 1982 United Nations Convention on the Law of the Sea (UNCLOS)? Article 77 says that coastal states have exclusive rights to explore and exploit the natural resources found within 200nm and nobody else can do that without consent of the coastal state. The Diaoyu Islands are within 200nm, so back off. Do you see the black line I drew on the picture above? In accordance with the natural prolongation principle in the UNCLOS, that's my exclusive economic zone (EEZ).
Japan: Get real. Coastal states should use the coastline as the starting point to measure its EEZ instead of starting from the edge of the submerged continental margin like you are. Besides, you thought so little of the islands till 1968 when somebody shouted "OIL!" and you have been making a fuss ever since. What kind of owner were you? Apparently not much of one. Oh wait... that's because you were not the owner.  When Japanese businessman Koga Tatsushiro got to Uotsuri Jima in 1884, he didn't see a single soul there. In short, he set up a successful business in bonito fishing on Uotsuri Jima - after he was granted lease rights for 30 years free of charge to four of the islets, Japanese workers and their families flocked to the islands and stayed. Koga's first landing on Uotsuri Jima happened a decade before my supposed thievery of the islands in 1894. You know what they call this? Finders keepers, losers weepers!
China: *Akhem* Allow me to educate you in the art of fair policy-making within boundaries set by international law, in other words the UNCLOS. Clause 3 of Article 77 states that "the rights of the coastal State over the continental shelf do not depend on occupation, effective or notional, or on any express proclamation." Dear child, do you understand now how easily that settles our dispute?
Japan: Let's not get side-tracked and let's act like mature adults here, 'cuz the whole world is watching us and they're worried our tussle will turn into a full-blown war. We really shouldn't be letting this petty argument get in the way of our relationship, especially since I rely so much on you for your rare earths, and you are my biggest trading partner. Maybe you should just hand the islands over to me so we can get done with bickering. They're just a bunch of islets and rocks, and you got plenty of those in China to spare don't you?
China: Nice try. I know damn straight this ain't a petty matter. Whoever wins those islands gets not just the islands but also lands on the jackpot. It would enable me to claim sovereign rights to the entire continental shelf plus the EEZ to the north and east of the islands. Just think, all that marine life I can fish and hydrocarbon reserves I will have access to!
Japan: Keep dreaming. The Senkaku Islands under indisputable Japanese sovereignty entitles me to an EEZ that would extend my sovereign rights 200nm to the north and west of the islands. That encroaches upon your continental shelf, but who gives?
China: Since it seems unlikely that we'll agree on who the islands belong to, let's divide the goods up to satisfy us both.

(Disclaimer: The above dialogue describes the action taken by each country and does not attempt to portray individual opinion on the matter)

The looming question: Each side has spoken; what happens now?

China and Japan can submit the case to the International Court of Justice (ICJ) and let the ICJ come up with a peaceful and equitable resolution. Peter Dutton discusses these three delimitation options that have been put on the table, in his article "Carving Up the East China Sea":

1) The Single Integrated Boundary - an equitable division of the area can be achieved using geographical features as a starting point and taking into account the special circumstances, those being the dispute over who has rights to the Senkaku/Diaoyu Islands, and the historical patterns of use by each country. The ICJ  took this approach to solve the 1984 Case Concerning the Delimitation of the Maritime Boundary in the Gulf of Maine Area. In that particular case, the U.S. and Canada, like Japan and China today, found themselves in a dispute involving overlapping continental shelf claim, overlapping exclusive economic zones, and the proper methods of drawing a maritime border in resource-rich waters with historical use by the people of both countries.

2) Multi Functional Boundary - multiple types of boundaries to allow each country exclusive jurisdiction over the same space. The delimitation of the seabed boundary may be based on the natural extension principle, and the EEZ can be established using the median line principle. This approach helped the Australians and the Papua New Guineans reach a compromise over the Torres Strait in the late 1900s.

3) Joint Jurisdictional Zone, Joint Use and Development, and Joint Business Development

a noteworthy mention...

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In 1920, the Japanese rescued 31 Chinese fishermen who were shipwrecked on one of the islets. The Chinese consul in Nagasaki wrote a letter of gratitude to thank the Japanese for their help. In it he referred to the islands by their Japanese title, Senkaku Islands, or 尖閣列島, instead of the Chinese term Daiyutai 釣魚島 (see fourth column from the right in document's reproduction, left) Does this vitiate (and inconveniently so) the pro-China camp's use of Ming, Qing and Liuqiu natives' reference to the islands by a Chinese title as a basis for its irredentist claim?


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